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Nigeria Oil Palm Sector - FY'16 Earnings Preview
- Oil palm business flourished in 2016, with the listed players reporting impressive earnings. Particularly, top and bottom-line (excluding revaluation gains) were up by an average 45% and 96% respectively as at 9M’16.
- The main driver of the strong performances has been higher prices of local palm oil products, following the inclusion of Palm oil on the list of 41 items banned from the Central Bank’s official FX window. The policy decision increased the cost of imported palm oil products as the FX was sourced at the significantly higher rates in the autonomous markets.
- Consequently, palm oil prices have increased significantly over the course of 2016 even as demand for locally made palm oil and derivatives surged. Particularly, palm oil retailed at an average price of
N764/litre in Q4’16 – more than doubling average Q3’16 prices. - In all, we are positive on the Q4’16 earnings for the sector. Coupled with the already strong performance up to 9M’16, we anticipate a record-high profits for FY’16.
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Tominiyi Ramon
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